3 top picks about to grow

General Mills NYSE:GIS, WK Kellogg New York Stock Exchange: KLG AND Conagra NYSE: CAG they are among the lowest-rated stocks tracked by Marketbeat. Their analysts are more pessimistic than most other stocks tracked by the platform, yet they are recovering because their industry and businesses are on track to turn around this year. The pivot returns to growth from contraction with critical detailed cash flow. Solid cash flow supports strong capital return prospects for these high-yield stocks, which are also cheap.

The high return is relative to the consumer staples sector and the broader market. All three of these stocks yield more than the Consumer Staples Sector ETF (XLP), which itself yields 2.8%, more than double the overall market. These stocks are also valuable, trading below 15x and up to 12x earnings compared to an average of 22x for the S&P 500 and 25x to 30x for the highest-valued consumer staples stocks. And don’t forget that this sector provides low-beta insulation from recessions and market volatility.

General Mills is advancing from the double bottom and is returning to the trend

General Mills’ stock price fell heavily in 2023, but formed a double bottom that is still in play. After rebounding from the lows, the market broke above critical resistance to confirm a reversal within a broader trading range. The market is ready to move towards the upper limit of the range around $75 and could break out to higher prices. A move above $75 would bring the market back into trend and open the door to higher prices later this year.

The latest results and forecasts have been mixed, leading many analysts to raise their price targets but lower their expectations for the current quarter’s earnings. The bottom line is that the bar is set low for the fourth quarter and a return to growth is expected this year.

The forecast is for top-line and bottom-line growth aided by pricing power and margin expansion. Since the bar is set at a low level, the company could outperform and/or provide favorable guidance. In this scenario, analysts will continue to stimulate price action and push the market higher. Until then, General Mills’ 3.35% dividend yield will trade at 15 times earnings.

Conagra Brands has deeper value and higher returns

Conagra Brands is also poised to bounce back this year, with shares rising from the bottom and on track to break a critical point of resistance soon. This market is supported by the improvement of the internal economy and by a profitability outlook that plays in favor of the dividend. The stock is among the highest-yielding consumer staples, with a yield close to 4.5%, and is reliable. The company pays out about 50% of its profits and maintains a strong balance sheet to continue making annual increases.

Analysts rate Conagra Hold and are driving the market towards higher prices. The few revisions that emerged from the FQ3 results all include price target revisions that place the market above consensus. The consensus implies an upside of around 6%. A move to the consensus target of $33 would push the market out of its trading range and above critical resistance.

WK Kellogg dissolves and approaches a critical level

WK Kellogg is a slightly different story; this stock imploded following the spin-off of the global snacks business, but is now recovering. The technical action brings the market close to the critical pivot point of its post-split opening trade. It could advance another $10, or 50%, if the market breaks above that level. Drivers include low 13x earnings multiple, healthy balance sheet and 3% yield.

The caveat is that analysts present a hurdle to limit gains. KLG is trading well above the high end of analysts’ range, suggesting the stock is overvalued. However, analysts may have been cautious with their initial targets and may increase them if solid results are delivered. However, the consensus for the current quarter’s results is for sequential growth and higher revenues post-split, which is a high bar to beat.

Before you consider General Mills, you’ll want to hear this.

MarketBeat tracks daily Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and General Mills wasn’t on the list.

While General Mills currently has a “Hold” rating among analysts, top analysts believe these five stocks are better buys.

View the five stocks here